Tag: Lyft

  • LUPA Stocks –  Four Stocks Funded by Venture Capital

    LUPA Stocks – Four Stocks Funded by Venture Capital

    4 min read

    LUPA Stocks - Four Stocks Funded by Venture Capital

    LUPA stocks are Lyft, Uber, Pinterest, and Airbnb stocks. This makes LUPA nickname. The other nickname for these stocks is PAUL stocks. Some of them are already publicly traded but some are waiting to be in the coming future, for example, Airbnb. The common thing for all of them is that they all are companies funded by venture capital and private capital. They have become well-established brands and widely recognized businesses. The other common thing is that all of them enjoy users’ support, but profits have been mysteriously absent. 

    LYFT

    Lyft went public in March this year. In August its shares dropped 30% compared to their $72 initial IPO price. But there’s good news too, as not everything is bad for Lyft.

    Several days ago, actually one week ago, Guggenheim Capital declared it’s improving Lyft’s shares advisory from neutral to buy. At the same time, they announced a targeted price is at $60 which is a 19% increase. 

    The main reason behind is calming down of the price war with Uber.

    LUPA Stocks

     

    Uber is expanding its business to several new fields like food delivery in the domestic market, but more importantly, Uber is expanding its operations internationally. So, the price war with Lyft now seems pretty much tricky. Uber is making loses in these parallel business and has to cover them somehow. The price war with Lyft is exhausting and without the expected result. Moreover, Uber has to earn money in the domestic market to cover losses caused by international competition and the intention to expand the business. It likely went about it too early. 

    The consequence is that Uber has to raise its prices for ride-sharing if they want more cash. That is an opportunity for Lyft to do the same.

    Lyft is still an unprofitable company. Its share price is five times its annual sales. But Guggenheim claims that it is the question of the day when Lyft will start to earn profits from its business. Lyft is targeting a valuation of $21-23 billion. Fidelity Capital Markets holds about 7% of the Lyft’s non-public shares.

    Uber Is part of LUPA stocks

    Uber is Lyft’s main rival in the ride-sharing industry. The last decade was pretty eventful for them. This ride-sharing app is funded by venture capital. Their first appearance on the market was under the name UberCab in 2009. They expanded their business internationally and now they have food delivery, trucking, and scooter rental included domestically. Uber is one of the biggest tech IPOs and became publicly traded since May 2019.

    The early investors made millions, maybe even billions of dollars since the company came into the stock exchange. Anyway, their investment is increased in value.

    This somewhat controversial company has many challenges. Uber market cap on August 30, 2019, was $55.69B. 

    Honestly Uber, which is not posting profits, is an overvalued company.

    LUPA Stocks

     

    In Jun this year, Uber predicts that the value of its initial public offering will be from $44 to $50 per share. That would mean a valuation of up to $91 billion. But it is lower than $100 billion what was prior expected. Still, Uber is one of the highest offerings in history.

    Uber has another problem. Their attitude toward drivers was the subject of many scatting news reports and even strikes.

    Drivers have complained about their pay. The criticism of unfair labor practices has caused a public resentment toward the company. 

    Shares of Uber were at $33.96 in mid-August, which was the lowest since the stock’s appearance in May. And Uber shares continued to slip and the shares dropped below $36. 

    Pinterest is one of LUPA stocks

    Pinterest, another one among LUPA stocks, is a popular photo-sharing social-media online platform.

    The company claims that it has 250 million active users every month. The company started to be publicly traded in April this year and its stock price registered more than 28% rise on its first day of trading. The company’s stock started trading at $23.75, above the initial offering price of $19 and finished the day at $24.40 in April this year.

     

    It will anyway be tough for this social media company to be able to be a real rival of Twitter or Facebook. However, Pinterest management has reaffirmed a much less competitive path to growth than its rivals. 

    Their market cap is $18.68 billion and stocks are traded at $34.42 in August this year.

    Airbnb is LUPA stock

    The company was launched in 2008 and probably surpassed the founders’ expectations.

    This popular short-term apartment rental platform has upset the whole travel industry. For example, the best example of how huge it can be is the case of New York. This city has limited Airbnb’s ability to operate. The powerful lobbying forces from the hotel industry caused that.  

    This service has long been in the spotlight for an IPO. Now it looks the Airbnb is reading for its market debut. The company declared they made “substantially more” than $1 billion in revenue in the 3rd quarter of 2018. Some experts claim that the company’s profitability makes it a top candidate for the direct listing.

    It looks that the Airbnb can be the next big play. And their IPO may happen in 2020.

    Bottom line

    These four companies are among the most important ‘unicorns’. All of these LUPA stocks are startup companies valued at more than $1 billion. LUPA stocks are interesting to investors who are currently willing to reward tech businesses that lose money. They already did so with Amazon or Netflix in their beginnings. LUPA has been able to develop their businesses with the support of venture capital and private investments. But the public markets are not so welcoming to them at the moment. The stock prices show that. Still, they are worth investing. Maybe now more than ever as their current low prices suggest large raises in the future. And the future currently belongs to the tech companies.

  • May the IPO Be With You

    May the IPO Be With You

    3 min read

    Uber lyft strike over working conditionby Gorica Gligorijevic

    On the eve of expected IPO, drivers of both Uber and their competitor Lyft are planning to stage a strike across the USA on May 8.

    With the upcoming IPO for Uber, a ride-hailing company, 2019 season of unicorn and decacorn tech IPOs is scheduled to continue. Analysts are projecting a valuation of Uber to reach between $91B and $120B, very possibly reaching rarified air heights of valuation above $100B.

    By breaking this barrier Uber would become only second hectacorn after the Ant Financial. Such valuation would bring a windfall for both the shareholders and the company which is often castigated for burning its cash reserves.

    But not everything is rosy in the Uber-land.

    For the May 8, Uber and Lyft drivers in the USA are planning to stage a strike against the working conditions and the company’s policies. Drivers in Chicago, Los Angeles, New York, and San Francisco are planning to log off during the morning rush, between 7 A.M. and 9 A.M. local time.

    There are indications that they will be joined by their colleges across the country, but also in London. In cities which are hosts to Uber’s offices, the plan is to also stage a protest in front of them, and such events are expected both in the USA as also in other countries where Uber is operating.

    Organizers and supporting organizations of this protest, such as Rideshare Drivers United – Los Angeles and the New York Taxi Workers Alliance (NYTWA), are demanding safer and more secure work environment and that the company ensures that its drivers actually can make a living off their income.

    On May 3 NYTWA has published a post on their web site has announced their plan to support the strike.

    Their members, among which are not just cab but also Uber, Lyft and Juno drivers; have decided by vote to support their colleges from Uber around the world. “With the IPO, Uber's corporate owners are set to make billions, all while drivers are left in poverty and to go bankrupt”, states the post.

    The organizers have listed as one of the demands that the driver’s commission is guaranteed and set in the 80-85% range.

    While drivers in New York have fought and won a guaranteed equivalent of $17.22 because the drivers themselves must pay the payroll tax it accounts for $15 hourly rate, various fees imposed on them by Uber eat almost half of their incomes.

    One of the biggest complaints of drivers is work insecurity.

    uber and lyft strike

    Particularly telling are the cases of drivers who were fired with no explanation whatsoever, among them some have reasons to suspect that it was a retaliation for the participation in previous protests against Uber’s corporate policies. And with the company flooding streets with new drivers work is less and less certain as the competition for fares grows.

    But many voices are concerned with the other side of this situation. With an increased number of novice drivers, who are not yet familiar with the Uber driver’s app, quality of services is sharply plummeting. And with company’s very lax background check of drivers, it is more than reasonable to presume that the safety of customers is also affected, while Uber didn’t have a glowing reputation for safety, to begin with.

    As adding fuel to this flame comes the content of Uber’s S-1 filing and the immediate reaction from the Wall Street analysts.

    “We have incurred significant losses since inception. We incurred operating losses of $4.0 billion and $3.0 billion in the years ended December 31, 2017, and 2018, and as of December 31, 2018, we had an accumulated deficit of $7.9 billion”, is stated in the filling.

    Doom isn’t the worst scenario

    Though these are not the worst of the doom and gloom Uber is placing in their documents, they are obviously hoping to emulate the Lyft, who had a decent IPO featuring the similar sentiment in their own filling. The trump card of Uber’s IPO is two numbers which show that they are both a huge company and a very small start-up. They are boasting that their drivers have completed more than 10 billion of rides in 63 countries during 2018, but they make just a measly 2% of public commutes over the same period.

    But this double scale of size may prove to be irrelevant as the filing states that the company will need to generate and sustain increased revenues and decrease proportional expenses “and even if we do, we may not be able to maintain or increase profitability.”

    The Uber is intending to continue, and actually increase the level of, investments into driverless cars, e-bikes, and e-scooter. 

    In essence Uber plans to cannibalize own business model in an effort to achieve profitability. In other words, Uber which was promising to disrupt the world of daily commutes is now disrupting its own business outlook.

    Wall Street has already voiced its opinion.

    Uber must decrease its expenses (read: cut down drivers’ commissions) to achieve profitability. Though the company in its early days have attracted many part-time drivers who saw it as an opportunity for extra income through a side gig, for the majority of current drivers is the only source of income. Besides that, they are also working extremely long hours in a very uncertain environment, where they literally do not know whether they will have a job the next day.

    And psychological professionals cite these stressors as primary factors behind suicides of 8 Uber drivers in the USA over the past year.

    Many public figures and activist investors were speaking for years against the business model of Uber. But maybe the worst condemnation of it comes from company’s own filing on the eve of their IPO: “Our workplace culture and forward-leaning approach created operational, compliance, and cultural challenges and our effort to address those challenges may not be successful… a failure to rehabilitate our brand and reputation will cause our business to suffer.”

    Don’t waste your money!

    risk disclosure

  • Morgan Stanley Taking Lyft For A Short Ride?

    Morgan Stanley Taking Lyft For A Short Ride?

    3 min read

    Morgan Stanley Taking Lyft For A Short Ride?
    Lyft, a popular ride-hailing app, has gone public on 29th of March this year, but since then their ride was a bit bumpy. And for that, they blame the Morgan Stanley, the underwriter of IPO for their direct competitor Uber

    When Lyft got listed on the market on March 28 stock was priced at $72 dollars. When next day it started trading it opened at $87.33, but quickly reached the high of $88.10 and closed at $78.29, 8.7 percent above its listed price. On Monday, April 1, it has closed at $69.01, just short of $3 dollars under the price the initial investors have paid it. Since then it has recovered and is moving above the listing price, but Lyft still has a long ride ahead.

    Reports said: Morgan Stanley is trying to short Lyft

    According to the report from the New York Post, based on the unnamed sources, Morgan Stanley is trying to short Lyft. Though the NY Post has a bit of a reputation, the Monday drop in stock price precedes some rather bizarre bets. Recently Lyft has sent an email to their pre-IPO investors reminding them are not allowed to commit to any transactions that might affect a holder’s economic interest in the stock. Allegedly, this and the language of the “lock-up” agreements have led investors to hedge their investments, and not trying to earn from the fall of the stock price. A “lock-up” agreement is a legally binding contract issued by the underwriters of an IPO that prohibits people close to the company, including executive and employees, from selling shares for a period of time, in the case of Lyft for 6 months.

    Morgan Stanley Taking Lyft For A Short Ride? 1
    Despite the fact that Lyft has yet to report any profits, IPO has attracted a lot of attention and actually getting oversubscribed on the second day of trading. According to the same NY Post report, Morgan Stanley has contacted one of the IPO’s underwriter in an attempt to seek help in shorting the stock. Allegedly, Morgan’s customers who have invested in the Lyft before IPO are attempting to protect their investment from price fall, contrary to the “lock-up” the agreement and the bank is offering them such product. And the report is citing an unnamed investor saying “If I can lock in $70 now, I’m going to do that”.

    Do you know what the Shorting stock does mean? Find HERE

    Lyft is demanding

    And Lyft has decided to respond to this situation. According to reporting of CNBC, they are threatening Morgan Stanley with a lawsuit over this situation. In a letter, which CNBC had reviewed, Lyft is demanding that the bank publicly state that they are not helping early investors in short-selling the stock. But also demand that if they are selling such product to hand over a list of shareholders who are involved. While Lyft has requested a response by the end of the day on April 2, Morgan Stanley is yet to officially reply to these allegations.

    However, in the statement to CNBC, a bank’s spokesperson have stated that Morgan Stanley “did not market or execute, directly or indirectly, a sale, short sale, hedge, swap or transfer of risk or value associated with Lyft stock for any Lyft shareholder identified by the company or otherwise known to us to be the subject of a Lyft lock-up agreement.”

    In the reported letter Lyft and the IPO syndicate are accusing Morgan Stanley of creating a special instrument which allows pre-IPO investors to circumvent the “lock-out” agreement and short-sell the stocks. “Our firm’s activity has been in the normal course of market-making, and any suggestion that Morgan Stanley has engaged in an effort to apply ‘short pressure’ to Lyft is false,” the spokesperson for Morgan Stanley said.

    The single largest transaction

    According to CNBC’s report quoting an unnamed person close to Morgan Stanley operations, short-selling accounts for 1.3% of Lyft’s trading volume, with single largest transaction accounting for 425,000 shares. Also, according to this report, the Financial Industry Regulatory Authority, the self-regulatory organization of the US banking industry may have been involved in this matter.

    Maybe the strangest thing in this dispute between Lyft and Morgan Stanley is the reports from market analysts, including the Citron Research one of the investors in Lyft, calling the shorting of the company an “amateur short”. Citron has published a report stating five reasons to not short Lyft, chiefly stating projection of the Goldman Sachs that ride-hailing industry will grow to $285 billion by 2030. With that in mind, Morgan Stanley has secured the underwriting deal for Uber’s IPO, the direct and much larger competitor of Lyft. And according to CNBC’s reporting Lyft has addressed the above-mentioned letter also to the bankers who are managing the Uber’s IPO, which is interesting as the short-selling products are created in a different division of the bank, separate from investment banking.

    Don’t waste your money.
    risk disclosure